Digital Transformation
Digital Transformation
Succeeding at
digital transformation
iStock © Jag_cz
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POINT OF vIEW: Leading Digital:
Turning Technology Into Business
Transformation
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INTERvIEW: Winning the digital battle
at Pernod Ricard
DESANGES P-R
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CASE STUDY: Digital transformation
at Starbucks, Codelco, Asian Paints
and Volvo
http://news.starbucks.com/multimedia
Based on Leading Digital: Turning Technology into
Business Transformation by George WesTerman,
Didier BonneT and andrew mcafee (Harvard
Business Review Press, October 2014).
In brief
Becoming a “digital master” remains How did Pernod ricard deploy its digital starbucks, asian Paints, codelco,
a major challenge for the majority of transformation? The company’s head of and Volvo are all active in vastly
today’s companies. According to the digital, Maël Tannou, explains that they different sectors, but they all share
authors of Leading Digital, “digital did not leave the establishment and digital mastery in common. Learn how
masters” concentrate their efforts communication of key strategic digital these digital masters are using new
on customer experience, operational priorities to chance. The first step: get technologies to redesign operational
efficiency, and business model everyone on board. processes, customer experiences, and
innovation – and suggest the rest of us business models.
follow their lead!
Leading
digital
Turning technology into
business transformation
D ’ après Lead ing Digi t a l : Tur ni ng t e c hno l o g y i nt o bu si n e ss t r a n sf o r m a t i o n d e G e o r g e W e s T e r m a n , D i d i e r B o n n eT
et a ndrew mcafee ( Ha r v a r d Bus i ne s s Re v i e w Pr e ss, o c t o b r e 2 0 1 4 ) .
between 2011 and 2014, George Westerman, Didier bonnet, and Andrew THE WHAT: STRATEGIC
McAfee studied digital transformation in almost 400 non-tech companies PRIORITIES
and found that only a small minority are succeeding at becoming what the
“The what” needed to succeed at becom-
authors call “digital masters.” The fact that digital masters are on average ing digital requires significant investment
26% more profitable than their peers — and this performance gap is in three key strategic priorities: customer
only set to increase with time — is reason enough for Business Digest to experience, operational processes, and
business model innovation.
present the study’s key lessons for digital transformation.
MEMO
• To be a digital master, companies must excel in two dimensions: digital capability and leadership capability.
• acquiring digital capability requires investment in customer experience, operational processes, and business model innovation.
• Leading digital transformation is about getting everyone in the company on board and moving in the same direction.
inertia, or “the failure to sense the need to change”: n Sustain the transformation
• Build awareness. Start dialogues around the potential threats Loss of momentum is a dangerous threat to the success of your
and opportunities of digital and the need for transformation digital transformation. After an initial phase of high interest and
• Define your starting point. Analyze the maturity of your cur- adoption, change fatigue often sets in, and people go back to
rent digital competencies, and identify which current strategic their old ways of working. To ensure the sustainability of your
assets will help you to excel. Digitally challenge your current digital transformation:
business model. • Build foundation capabilities. Ensure you have a plan for raising
• Create a shared vision. Align other top leaders around a shared digital competence within your organization and a well-structured
vision of your company’s digital future. digital platform. Strengthen IT-business relationships.
• Align incentives, rewards, and recognitions to your digital
transformation objectives.
n Focus investment • Measure, monitor, and iterate. Build a management process that
“Focusing investment is where the rubber meets the road in allows you to measure and monitor the progress of your digital trans-
digital transformation,” write the authors. To focus your early formation and generates enough visibility to adapt course as needed.
digital transformation investments: The 26% higher profitability of digital masters should be
• Translate vision into action. Convert the digital transformation “reason enough to get leadership teams interested,” note the
vision into strategic goals, and translate priorities into a roadmap authors. “But there’s also another, even more fundamental,
of initial activities. reason: when it comes to the impact of digital technologies on
• Build governance. Design governance mechanisms to steer the the business world, we ain’t seen nothing’ yet.”
transformation in the right direction.
• Fund the transformation. Design a balanced portfolio of digital * “Customer Experience Impact Report” (RightNow/Harris Interactive,
investments and figure out the funding mechanisms. 2011).
Retail Banking
Pharmaceuticals
Consumer Packaged
Goods
•
Insurance
Utilities
Manufacturing
BEGINNERS CONSERVATRICES
FASHIONISTAS Many advanced digital features (e.g., social, mobile applications) in DIGITAL MASTERS Strong overarching digital vision / Excellent governance across
silos / No overarching vision / Underdeveloped coordination / Digital culture may exist silos / Many digital initiatives generating business value in measurable ways / Strong
in silos digital culture
BEGINNERS Management skeptical of the business value of advanced digital CONSERVATIVES Overarching digital vision, but may be underdeveloped / Few
technologies / May be carrying out some experiments / Immature digital culture advanced digital features, though traditional digital capabilities may be mature /
Strong governance across silos / Active steps to be build digital skills and culture
b iography
Pernod Ricard’s head of digital, Maël Tannou,
The Pernod Ricard Group was Maël Tannou’s
explains how this French giant is executing a
last client at CapGemini Consulting. He worked
digital transformation as part of its goal to be to help Pernod Ricard build a digital transfor-
the company that leads growth and changes mation roadmap before being hired in January
2014 as Head of Digital, Sales and Marketing
the rules of the game in its industry. Solutions. In 2011-2012, he was seconded
as a visiting research scientist at the MIT
Sloan School of Management, where he led
DESANGES P-R
the second phase of a global research program
on digital transformation for brick-and-mortar
companies.
“Our mission – créateurs de convivialité need to fulfill their traditional, separate 2012, our first investment in the digital
– has a very strong social component by roles, digital transformation also requires transformation was to create and launch
nature. In this context, new technologies, these leaders to work closer together.” a company-wide social network, called PR
such as social media or mobility, are huge Chatter.” Deputy CEO Alexandre Ricard
game changers that are being massively Digital transformation starts directly sponsored the project and heav-
adopted by consumers. Similarly, our dis- with employees ily promoted adoption. His vision for the
tributors are experiencing major changes As a globally decentralized company, with enterprise social network was to make
as they embrace digital themselves: tra- 18,000 employees spread over 80 mar- decentralization a strength, not a source
ditional partners – such as retailers, bars kets, Pernod Ricard is disparate by nature, of silos across which information does
and restaurants – are going through their adapting group strategies to local contexts not get shared. “He communicated that
own digital transformations; new players as needed. This means that to succeed the point of being active on the platform
are arriving, such as Amazon or Flash-sales at a Group-level digital transformation, is to be able to replicate local successes
websites; and finally new business models they first needed to create stronger links quickly,” explains Maël. “There are many
– such as direct-to-consumer approaches – between all of their dispersed employees. great applications available out there now,
are becoming more and more accessible,” “Before being able to change the way we so the challenge wasn’t technical. The
says Maël Tannou. In the implantation of engage with consumers and other exter- big challenge initially was adoption. It
Pernod Ricard’s digital transformation, the nal stakeholders, our digital transforma- was about changing how people work.”
marriage between technology and business tion needed to start with our employees,” During the adoption phase, top managers
is scaling new heights. “One factor that has says Maël. “We needed to raise our global sponsored, encouraged, and led the way on
become most clear to me over the past year digital IQ and overcome internal silos in the enterprise social network. In addition,
is the critical importance of business-IT order to be able to share information and the executive committee gave KPIs to all
relationships,” says Maël. “While both still specific business practices quickly. So, in Group executives, such as percentage
of employees active on the platform per major challenge for them and for us as well.
affiliate. “During this phase, we measured facT sHeeT In terms of brand management, having an
activity. It was about level of engagement GrouPe PernoD rIcarD outdated picture up is counterproductive for
and content generation – how many, how us, which is partly why we are committed to
big, how much.”* creation: 1975 helping our partners in this aspect of their
Headquarters: Paris, France digital transformations.” Pernod Ricard
Managing infobesity after Industry: Drinks has launched a multifunctional project
achieving critical mass employees: 18,000 (2014) (involving tech, business, and legal teams)
“The challenge now that there’s lots of revenue: €8 billion (2014) to build a centralized single platform for
content is to make sure the information everyone to interface on together to keep
is valuable. We need to manage the suc- digital information and images of Pernod
cess of adoption so that we don’t drown social network, Maël notes that efforts to Ricard products up-to-date. “Updating and
in infobesity,” says Maël. In response to raise the company’s general digital IQ are organizing the images and information on
this new challenge, quality KPIs have been important to transformation success. In this single common platform is a major
added to try to measure the value of em- November 2014, Pernod Ricard launched piece of work. Some affiliates were already
ployee posts. “If people just share links, a MOOC to teach the basic and advanced ahead of it, while others did not consider
these are far less valuable than a link with elements of digital to all employees (what it a priority. The Absolut Company is one
a short paragraph that explains why the is big data, social media, etc.) Several brand company that was very mature on the
topic, and so we scaled up their approach
to the entire Group.” Maël notes that such
issues around going digital are always at
once both problems and opportunities, and
“Our company’s IT leaders are becoming more that the solutions tend to demand greater
collaboration than in the past.
business savvy, and our business leaders are
“Digital transformation requires experi-
becoming more tech savvy.” mentation and the generation of new ideas.
When we began our digital transformation,
our deputy CEO delivered a very powerful
message: ‘start often and simple, fail fast,
content is relevant. Hashtags are also an months after its launch, this MOOC counts scale what works.’ This is truly the chal-
indicator of value, because they help the around 1000 active participants. lenge of digital transformation,” concludes
post to be more visible, easier to search and Maël. “The digital world works in an agile
find. These are the type of aspects that we Collaborating to sustain mode, but scaling is still the big challenge.
consider more and more now,” says Maël. the transformation You have to focus on key battles and win
“To achieve this, we designate community “By the end of 2013, an issue that our them, if you are going to transform your
managers, who can explain how to share traditional partners, such as Tesco, Car- business.” n
posts better to their members. We train refour, and WalMart, are facing in their
people when they join; rather than just simultaneous attempts to go digital had be- * After one year, employees had published
giving them their login and password and come apparent,” says Maël. “They now sell 60,000 messages, according to Marie Jung
letting them at it, we also explain how to online, which means they need to have the in her article “Pernod Ricard fait jaillir les
use it. And we provide internal webinars and most correct, recent pictures of our bottles, idées sur son réseau social,” 01net.com,
guidelines.” In addition to the enterprise as well as product descriptions. This is a June 2013.
Digital transformation at
Starbucks, Codelco,
Asian Paints and Volvo
B ased on L eadin g Di g i t a l : Tur ni ng Te c hno l o g y i nt o B u si n e ss Tr a n sf o r m a t i o n b y G e o r g e W e s t e r m a n , D i d i e r B on n et
and An drew McAf ee ( Ha r v a r d Bus i ne s s Re v i e w Pr e ss, O c t o b e r 2 0 1 4 ) .
Starbucks, Asian Paints, Volvo and mining company Codelco are active in vastly different sectors, but they all
share digital mastery in common. Each is using new technologies to alter and improve their operations, how they
interact with clients, or restructure their business model. And all of their different digital transformations began
with compelling visions that were implemented from top-to-bottom while still allowing for employee and customer
input.
Flickr / codelco
miners to swap dirty, dangerous work conditions for remote con-
trol centers, where they apply their knowledge by responding to
data flowing in from embedded devices in mines. In addition to
drivers provides Volvo unprecedented user information as well as enhanced loyalty for services rendered.
The closer proximity between manufacturer and end-user via digital technologies has left all stakehold-
ers better off, with Volvo and its dealerships now pooling customer databases to sharpen their respective
reactivity levels and marketing focuses. n
@
DIGITAL DISRUPTION: UNLEASHING THE NEXT WAvE
OF INNOvATION
De James McQuivey (Amazon Publishing, février 2013).
James McQuivey’s specialty is the power and impact of digital disruption
on traditional businesses. For over a decade, he has worked as a
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